I did a blog article on Sharemax a month or two ago, referring to the expression about where there is smoke there is fire, and it was up for a day or so, when I read about the company’s latest plans that the main director would be stepping down from his responsibilities and assuming the responsibility of suing everybody in the media who had something bad to say about the company, which led to me taking down the article for some editing.

Very quickly however, those media articles seem to have come true – the investors in Sharemax, who are largely elderly Afrikaans people in rural areas, who have invested their pension money, are suddenly not getting paid and there appears to be one disaster after another. 40 000 Investors are now looking at different scenarios from getting their money back to maybe getting almost no money back at all and I certainly hope the various authorities are going to make sure that all of the brokers who recommended that people invest in this unlisted product, are going to be made to come to the party and pay out compensation to the people that they advised.

Sharemax were paying extremely high commission and while I am sure that never affected any brokers’ decisions, it is amazing how often, when a product collapses later, you hear that those referring work to it were being paid commissions that would exceed the commissions paid, for example, by Unit Trust companies to brokers. The moral of the story, once again, is stick to the big banks, stick to well-known blue chip listed companies and don’t invest in risky products which by definition are basically products that pay more “interest” or “returns” and Stock Exchange listed shares or the big four banks.